NZD/USD extends the decline to below 0.5900 on downbeat Chinese PMI data, renewed trade tensions

• NZD/USD weakens to near 0.5880 in Friday's Asian session.
• China's Caixin Manufacturing PMI declines to 49.5 in July, weaker than expected. 
• Investors will closely monitor the highly anticipated US July Nonfarm Payrolls data on Friday.

The NZD/USD pair extends its downside to around 0.5880 during the early Asian trading hours on Friday. The New Zealand Dollar (NZD) softens against the US Dollar (USD) amid escalating trade tension between the United States (US) and China. 

Bloomberg reported late Thursday that US President Donald Trump said he will set a baseline tariff rate of 10%, resisting prior suggestions he could raise the floor to 15% or higher. Nonetheless, trade tensions are back in the headlines as a senior US official noted that there is no final decision on trade with China. Tariff uncertainty is likely to undermine the China-proxy Kiwi in the near term, as China is a major trading partner of New Zealand. 

Furthermore, the latest downbeat Chinese economic data contribute to the NZD's downside. Data released by Caixin Insight Group and S&P Global on Friday showed that China's Manufacturing Purchasing Managers' Index (PMI) eased to 49.5 in July from 50.4 in June. This figure came in below the market consensus of 50.3.

On the USD's front, the hawkish remarks from the Federal Reserve (Fed) provide some support to the Greenback. The Federal Open Market Committee (FOMC) voted 9-2 to hold its benchmark federal funds rate in a range of 4.25%-4.5% at its July meeting on Wednesday.

Fed Chair Powell reiterated that the Fed remains data-dependent when it comes to making monetary decisions in the coming months, adding that the US central bank will carefully monitor the labor market for any signs of weakness ahead. The US Nonfarm Payrolls (NFP) report for July will be the highlight later on Friday. In case of a weaker-than-expected outcome, this could drag the USD lower and cap the downside for the pair.